Nowadays more and more housing cooperative societies are receiving notices from the government, ever wondered why?
Housing cooperatives are not exempted from income tax, but to avoid tax liability housing cooperative avoid paying tax. A housing cooperative is either fully or partially taxable are not an exception to this either. Income Tax department does not interfere much on housing cooperatives but that does not mean they do not pay their tax.
As the laws are becoming stringent these societies will face problems as income tax department will charge heavy interest and penalties for the tax evaders. Housing societies should update themselves with the various provisions of income tax that are applicable to their respective societies.
I bring to you the primary level categorization of tax provisions into four parts. They are:-
1. Taxing Cooperative Societies
In case of the cooperative housing society, there is no minimum threshold limit. An income slab has to be followed for computing tax liability: 10% tax for income up to Rs. 10,000, 20% tax for Income from Rs. 10,001 to Rs. 20,000, and Income Rs. 20,001 onwards – tax @30%. The same is followed by a CHS, if a society has any taxable income, it has to file a return of income. From Accounting Year 2014-15, like companies, cooperatives are also required to pay surtax @ 10% when the profit exceeds Rs.1 Crore.
2. TDS
A small amount of percentage of the entire payment is deducted at the time of payment made to the party, who can be a contractor or professional that is called TDS. After considering the amount of payment that is paid in his/her favor by the society TDS is paid respectively. Such a payment is paid by the government account by the society. The society that will deduct tax from a person or company is called Deductor and the one who is being charged is called Deductee.
3. Tax Audit
Any society with a gross income of Rs.40 lakhs or more from a business or society has to get their accounts audited. This includes everybody may it be an individual/business / cooperative society under sec 44 AB of income tax act and bye-laws.